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The idea of making payments using a mobile phone has long been in the heads of credit card companies, financial institutions, wireless carriers, merchants, and consumers. The McLean Report research notes, “Mobile Payments: Will That Be Cash, Credit, or Cell Phone?” and “Mobile Payments: Conquering the Western Frontier?” previously touched on this topic in 2004 and 2006 respectively. Mobile payments have been gaining popularity in countries like Japan and South Korea over the past few years, and trials are now underway in North America. It looks like the hype is finally starting to become reality, but it will be a few years yet before the technology is ubiquitous.

Mobile Payment Technology Overview

There are a couple of methods for making payments using a mobile device. One involves using Short Message Service (SMS) to exchange text messages to carry out a transaction – such as the PayPal and Amazon TextBuyIt mobile payment systems. The other method – and the focus of this research note – involves using Radio Frequency Identification (RFID) based Near Field Communication (NFC).